U.S. markets falter while gold rises, March 10-14

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2014-03-19

Investors turned jittery over the period, with the Dow Jones Industrial Average down 388 points to 16,065.67, the S&P 500 Index shedding 36 points to 1,841.13 and the Nasdaq Composite Index 87 points lower to 4,245.40.

The selling was understandable: a referendum in the Crimea region of Ukraine increased the animosity between Russia and the West; more reports out of China pointed to slower growth; and export, retail and industrial production numbers were all down.

The worrisome news in the broader economy had some effect on gold, with prices up US$39 to US$1,379 per oz.

Gold-streamer Sandstorm Gold released financial results that lifted its shares by 29% to $6.71. For 2013 the company recorded revenue of $59.8 million. Sandstorm’s business model sees it offer upfront payments in return for the right to buy a percentage of a mine’s production at a fixed price. The average price paid for gold ounces on its 27 agreements last year was just US$420 per oz. Attributable gold production for the year came in at 30,000 equivalent oz. gold, but it expects a 50% increase over the next two years. The firm reported that $21.9 million of profits in 2012 turned into a $74.6-million loss, mainly due to a $52.2-million non-cash impairment charge related to the bankruptcy of Colossus Minerals and its Serra Pelada mine.

Tasman Metals was the period’s second-best performer, as its shares shot up 26% to $1.61. The buying came on the back of a rumour the company could merge with near-term graphite producer Flinders Resources. Tasman holds the Norra Karr rare earth elements project, while Flinders’ key asset is the Woxna large-flake graphite deposit. Both are in Sweden.

McEwen Mining’s stock was up 21% to $3.56 per share, as it updated reserves and resources at its 49%-held San Jose mine in Argentina. Proven and probable gold and silver reserves at the mine increased by 12% to 409,400 oz. gold and 30.1 million oz. silver, and gold grades increased by 9% to 7.03 grams per tonne. Measured and indicated resources were also up 7%, while inferred resources fell, with gold grades down 2% to 7.23 grams per tonne.

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